Bill Hewlett and Dave Packard would not be amused.

The founders of Hewlett-Packard -- some say Silicon Valley itself -- built their empire on a people-centric management model they christened The HP Way. But author and veteran tech journalist Michael S. Malone says that mantra has come under siege in past years, culminating in the exit on Friday of CEO Mark Hurd following a sexual harassment inquiry.

Stanford alumni Bill Hewlett and Dave Packard in the 1950s outlined the tenets of a corporation that embraced performance bonuses, employee shares, ground-level decision-making, even tuition aid and allowing workers to leave early to get to Little League games. Business 101 today, novel at the time.

Malone said that long-held philosophy came under siege with the arrival of outsider Carly Fiorina -- who was ousted after a reign marked by the unpopular, costly acquisition of Compaq and a lackluster share price. Fiorina has said however she felt the HP Way was an excuse not to innovate, an impediment to change in a rapidly evolving tech corporate landscape.

Then Chairwoman Patricia Dunn quit in 2006 after accusations that HP had hired gumshoes to obtain phone records of board members and journalists.

Now Hurd, who HP said falsified expense reports to conceal his relationship with a contractor, has laid further waste to the Way, said Malone, author of Bill & Dave: How Hewlett and Packard Built the Word's Greatest Company.

HP's investigation did not find any violation of its sexual harassment policy, but did unearth instances where its code of conduct was violated, the company said.

At its peak, HP had levels of trust inside the organization that had never been seen before in the corporate world and has never been seen since in a company of that size, he told Reuters in an interview on Friday.

In a sense this was a double betrayal, he betrayed the corporate culture and ultimately he's now betrayed the dreams of all those HPers who were beginning to believe in the company again, said Malone, who worked public relations for HP from 1975 to 1979.

Malone says the basic philosophy came under fire after Fiorina -- the first outsider to take the CEO role -- was hired, and sought to impose a top-down style while rendering herself a lot less accessible than her predecessors.

Fiorina -- now a strong challenger to incumbent Barbara Boxer for a California Senate seat -- counters that too many at HP were resistant to much-needed restructuring.

Bill and Dave had once been radicals and pioneers. Now, I'd seen too many instances where a new idea was quickly dismissed with the comment: We don't do it that way. It's not the HP Way. The HP Way was being used as a shield against change, she said on her website,


The HP Way had its heyday in the 1960s, and today is credited with helping grow the corporation from a $538 garage outfit in 1939 into the $125 billion behemoth it is today.

There was an emphasis on life outside of work: HP bought up land for recreational activities around the world, and pioneered Friday afternoon beers at the office, for instance.

Experts like Malone say that approach became a model adopted by many in Silicon Valley -- including crosstown peers like Apple Inc and Cisco -- and helped differentiate the technology giants on the U.S. West Coast from their more strait-laced brethren back east.

Hurd was never an especially fervent admirer of Bill and Dave's tenets. But he restored the reputation for success that had waned under Fiorina, he said.

He was credited for turning around the company and more than doubling its share price during his tenure. Plying a belief in rigid cost discipline, he drastically shed staff -- something largely avoided before Fiorina.

Outside of Steve Jobs at Apple, it's hard to imagine a CEO that is more important to his company than Mark Hurd to Hewlett-Packard. He did a massive turnaround job, said Motley Fool analyst Rick Munarriz.

But with Hurd's departure, the company has the chance to re-establish the core of the Way, said Malone, who credited him however with making important changes.

What Hurd did was he went in and he didn't exactly embody 'The HP Way', but he understood it enough to get people back working again, and he restored that legacy of continuing success. HP is a world-beater company right now.

'The HP Way' has been pretty battered, there's not many people left there who really have lived it. But the spirit is embedded in the DNA of the company, Malone said.

(Editing by Edwin Chan and Diane Craft)